Business Banking Resolution Service

London, September 2020

BBRS stakeholder consultation summary

The BBRS is a non-profit organisation set up to resolve disputes between eligible small and medium-sized businesses and participating banks. It has been established to deliver an accessible and transparent service, giving eligible businesses the opportunity to have their complaint heard and independently reviewed. It will make decisions based on what is fair and reasonable in the circumstances and seek to inspire confidence through consistency of approach. It was established in response to the commitments made by the banking and finance industry following the Simon Walker Review. It flagged up the need for an independent service to resolve eligible historical and current complaints for small and medium sized businesses that have not previously had access to independent review.

The service is in a Live Pilot phase and will be fully launched later this year. There are currently seven participating banks for which the BBRS is able to accept complaints: Barclays, Danske Bank, HSBC, Lloyds Banking Group (including Lloyds Bank and Bank of Scotland), Natwest Group (including Royal Bank of Scotland, NatWest and Ulster Bank Northern Ireland), Santander UK plc, Virgin Money (including Clydesdale Bank and Yorkshire Bank).

About the BBRS

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Contents

Introduction 4

Consultation respondents 6

Summary of responses 7

Detailed responses 10

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This document provides a summary of responses to the Business Banking ResolutionService’s (BBRS) stakeholder consultation as the organisation prepares to go live. Theconsultation ran from June to August 2020. The aim of this document is to provide asummary of the responses received.

Background

The consultation was conducted in advance of the BBRS’ launch in the autumn. Theobjective of the research was to seek input from potential customers and interestedstakeholders. This is to ensure the service is developed in line with the needs ofcustomers and others with an interest. The BBRS wants to ensure that the service is:

• Tapping into the widest sources of information possible.

• Alerted to any concerns and issues not picked up through existing dialogue,evidence or research.

• Reflective of those who may use the service.

This consultation looked to understand:

• Awareness, experience of and favourability towards Alternative Dispute Resolution .

• Current and potential complaint types between SMEs and their banks, in addition tothe types of complaint which may arise as a result of covid-19.

• Perceptions of certain operational aspects of the BBRS.

• Effective methods and channels for promoting the BBRS’ launch.

Introduction

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Methodology

The BBRS benefited from the participation of 15 key organisations in the consultationexercise, working via its research partner Portland. These included businessmembership organisations; professional advisers and their membership bodiesincluding representatives of the legal and accounting profession; and disputeresolution experts. Stakeholders were invited to attend a telephone interview, or tooffer a written response to the consultation. Both forms of submission have beenconfirmed to be on the record by those participating.

This document summarises the main points raised and the themes that arose. Theconsultation was conducted to invite qualitative input and was not designed to be arepresentative survey of all possible respondents. This summary is not intended to bean exhaustive record of all the points made and the absence of any issue does notindicate that it has been ignored or that it is of lesser importance.

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The Business Banking Resolution Service received 15 responses to its consultation: 12were conducted via phone interview, and 3 received as written responses. The namesand organisations or respondents are listed below:

1. Glenn Collins, Head of Technical Advisory, the Association of Chartered CertifiedAccountants

2. Suren Thiru, Head of Economics, British Chamber of Commerce

3. Emma Lovell, CEO, Lending Standards Board

4. Philip King, Small Business Commissioner

5. Andy Chamberlain, Director of Policy, the Association of Independent Professionalsand the Self-Employed

6. Chris Wilford, Head of Financial Services Policy, Confederation of British Industry

7. Professor Robin Jarvis, Professor of Accounting, Brunel University

8. Ken Bishop, Northern Ireland Assembly Group on Fair Banking and Finance

9. Giles French, External Affairs Director, City of London Corporation

10. Sue Chapple, CEO, Chartered Institute of Credit Management

11. Brian Speers, Chair, The Law Society of Northern Ireland Mediation Service

12. Heather Buchanan, Director of Policy and Strategy All Party Parliamentary Groupon Fair Business Banking

13. Tony Baron, Finance Policy Chair, The Federation of Small Businesses

14. Geoff Noon, Statistician, Manufacturing Technologies Association

15. Stuart McMillan, Policy Analyst: Legal Practice & Remuneration, Bar Council

Consultation respondents

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The key findings from each section of the consultation questions are summarisedbelow.

1. Awareness, experience of and favourability towardsAlternative Dispute Resolution

Although some stakeholders had extensive direct experience of using AlternativeDispute Resolution (ADR) and others had little or no experience, all stakeholders hadan awareness of the concept. ADR was felt by all to be an advantageous alternative tolitigation when deployed effectively, particularly for the cost and time savings whichserve to lower barriers to SMEs.

Respondents saw the primary drawback of ADR to be the risk that it does not lead toresolution. It was felt that an ADR service may lack the power to compel parties to acton its rulings and that it may lack the documentary evidence to enforce its decision-making. In this light, it was felt that the remit of an ADR service should be made clearto avoid confusion.

However, when participants were prompted with information about the availability ofADR, and its methods and processes, they felt that there was likely to be greater uptakearound such options from SMEs when expectations are managed correctly.

2. The effectiveness of ADR for SME complaintsagainst their banks

In the realm of disputes between SMEs with their banks, ADR was seen to beparticularly effective, as there was understood to be a gap currently for a business toolarge to use the Financial Ombudsman Service but for whom it would be onerous tochallenge a bank in court.

Considering this gap, the launch of the BBRS was seen positively by all participants.However, it was deemed essential to promote trust that the service is independent andneutral. Participants suggested that the BBRS could best show its independence bybeing transparent about its funding arrangements and the processes used forresolving disputes. If these were not clear, potential customers may assume there arehidden drawbacks to using the BBRS.

Summary of responses

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One other area where transparency is particularly important is around the eligibilitycriteria for the service. As the service will serve a relatively small community ofbusinesses, respondents felt that eligibility criteria must be clearly explained from theoutset to avoid businesses being disappointed in the service.

3. Current and potential complaint types betweenSMEs and their banks, and what complaint typesmay arise from covid-19

Stakeholders expected disputes between SMEs and banks to centre around two areas:first, product-related disputes, such as miscommunication relating to loans andpayments terms; secondly, disputes relating to banks’ handling of previous queries,where a bank’s perceived action or inaction has led to cost for an SME.

It was also noted that, beyond the covid-19 loan schemes, disputes were also likely toarise concerning loans agreed before the pandemic that may have become untenablegiven the government restrictions put on businesses.

In this context, stakeholders felt that the BBRS was launching at a pivotal moment andwould have a role to play in such disputes. However, participants also felt that theservice should not neglect its duty to continue investigating historical complaints atthis time.

4. Perceptions of certain operational aspects of theBBRS

As part of the consultation, we asked respondents for views on the planned SME liaisonpanel and the data and insights the service could gather from its operations.

The proposition of the SME liaison panel was well received by all respondents. However,stakeholders felt it very important that the panel act as a genuine feedbackmechanism. Stakeholders noted that while some SME liaison panels, they hadencountered had added great value, others had not generated the challenge neededto have a real impact. The make-up of the panel was seen to be pivotal in this regard;requiring a mix of genuine businesspeople and those from SME advocacyorganisations required to ensure a balanced view.

Stakeholders also saw particular value in the data that the BBRS could gather andpublish as part of its public interest mission. They felt that findings shining a light onthe SME landscape at a regional and sectoral level would be particularly valuable ininforming policymaking. This data was also seen as an excellent opportunity toevidence the BBRS’ transparency and further build credibility around the organisation.

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5. Effective methods and channels for promoting theBBRS around its launch

Several channels were recommended for communicating with SMEs effectively,notably bodies that would be the first recourse of an SME in need, such aspolicymakers, advisory bodies and trade associations. Social media, and LinkedIn inparticular, were also seen as valuable sources of information for SMEs.

Where relevant to their members and clients, representatives of industry and advisorybodies also welcomed the opportunity to promote the launch of the BBRS.

It was noted that although the launch of the service will be important in drivingawareness, it will also be important to maintain momentum in publicising the BBRSover time, to ensure that businesses in need can easily access information relating to aservice that has the potential to be extremely valuable to them. Stakeholders felt earlysuccesses would be key to successful uptake of the BBRS, and that case studies wouldbe an effective means to promote the service.

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Awareness, Experience of and Favourability towardsAlternative Dispute Resolution

We asked respondents for their understanding of Alternative Dispute Resolution (ADR),and of their perceptions of its advantages and disadvantages over litigation.

The levels of experience that stakeholders had in ADR processes was varied, however,representatives of larger SME organisations, or of accounting or law firms, were morelikely to have a general knowledge of ADR processes or to have engaged with thempreviously. The experience of small business association representatives tended to bearound conciliation in cases of late payments, or dealings with the FinancialOmbudsman Service. However, all stakeholders had some awareness of the concept ofADR.

According to respondents, their awareness of ADR hadrisen over recent years, due to the limited availabilityof court time and costs associated with litigation

Participants felt that an increasing number of initiatives were being set up globally topromote ADR.

Effective ADR was seen by all respondents as a positive alternative to avoiding thelength, complexity and cost of litigation. It was also perceived as a less risky solutionthan litigation, which would increase the accessibility of pursuing disputes for smallerbusinesses that may be put off by the opportunity cost of pursuing litigation. Therewere also perceived ‘softer’ benefits of ADR, including the potential for privacy duringthe process; the ability to protect relationships, and the space to air grievances andhave them heard.

Respondents saw the primary drawback of ADR to be the potential for resolution.Several stakeholders were unclear on whether mediation bodies had the ‘teeth’ orpower to decide outcomes and felt this may lead to confusion and expectations thatcould not be fulfilled within their remit. Some respondents also felt that ADR had thepotential to feel distant, compared to the catharsis of ‘having your day in court’, andthat ADR processes too had the potential to become long-winded. One stakeholderraised the difficulty of decision-making within ADR. While litigation procedures areaccompanied by much precedent, the privacy afforded to ADR cases leads to a lack ofdocumentary evidence to support decision-making and instead relies on thearbitrator’s definition of what is fair and reasonable in adjudicating.

With increased knowledge of the availability of ADR, and of its methods and processeshowever, stakeholders felt that there was likely to be greater uptake around suchoptions from SMEs if expectations were managed correctly.

Detailed responses

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The effectiveness of ADR for SME complaints against their banks

We asked respondents how effective a policy solution ADR was likely to be in disputesbetween SMEs and their banks.

Respondents overall perceived ADR as an effective solution in such cases and allsupported the launch of the BBRS to this end.

Several respondents recognised that there was a gapin the support available to SMEs that are too large touse the Financial Ombudsman Service but who wouldstruggle to contest a complaint in court

Several recognised that disputes between banks and SMEs were particularly sensitiveissues with the potential to cause great strain on business owners, and that dealingdirectly with the banks can in many cases could not provide the compromise possibleto resolve the issues. It was felt that the BBRS would offer a next step for such disputes.One stakeholder noted that although the clarity of processes within litigationprocedures made it the optimal solution for resolving banking issues, this was rarely anoption for SMEs with limited resources, an ADR service, while not necessarily theoptimal solution, was a very necessary creation.

However, in order to ensure the success of anyscheme, respondents felt it imperative that the entityshould be clearly independent and neutral in itsdecision making in order to achieve fair outcomes forboth parties

Trust in this independence should be promoted. Participants suggested that this couldbe achieved through transparency around the BBRS’ funding arrangements andprocesses used to resolve disputes. If these were not clear, potential customers withlow trust in banking systems may assume there are hidden drawbacks to using theBBRS.

Stakeholders also felt that transparency in the BBRS’ eligibility criteria was offundamental importance. As the service will serve the needs of a relatively smallcommunity of businesses with disputes against their banks, it must be made clearfrom the outset which cases and businesses are and are not eligible for the BBRS’services, to avoid businesses being disappointed in the service.

Respondents were divided in comparing the effectiveness of an independent schemeto a government one: on the one hand, it was felt that government backing lendsconfidence and credibility, but on the other that there may be other agendas at playwithin a government scheme, and that true independence would ensure the mostbalanced view.

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Current and potential complaint types between SMEsand their banks, and what complaint types may arisefrom covid-19

We asked respondents what type of complaints were most likely to arise betweenSMEs and their banks historically, and now in the context of covid-19.

Most respondents felt complaints were most likely to centre around two areas: firstly,product-related disputes, such as around loans and payment terms, and secondly,disputes that escalate because of the perceived handling by a bank and the knock-oneffects caused.

Within product-related disputes, miscommunication was seen to be one of the mostlikely original root causes, where SMEs may lack the understanding of the implicationsof their terms with banks, and banks may enforce unexpected penalties. Withindisputes relating to a bank’s handling of a scenario, it was believed that accusations ofdelays or inaction on the part of banks were likely sources of complaints, where theyhad led to a perceived negative impact on a business. These were seen as primedisputes to be handled through ADR.

It was noted that it was not the government loan schemes themselves that had themost potential to cause disputes in the current climate. For example, those businesseswho had reasonable loans agreed with the banks before the crisis, but who havebecome unable to honour their covenants due to factors outside their control, such asthe government ordered closure of their business due to the pandemic.

Stakeholders felt that the BBRS would have an important role to play in these difficultand sensitive disputes when they arise. It was noted that there will be justified cases onboth sides: in instances where banks have been tasked with recovering borrowedmoney, but businesses may not have the means to pay; or where businesses have beendenied funds, but for valid reasons.

The BBRS was felt to be launching at a pivotalmoment given the current economic climate, but itwas felt to be important that the service does notneglect its responsibility to also deal with historicalcomplaints

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Perceptions of certain operational aspects of the BBRS

The SME liaison panel

We asked respondents how the BBRS’ proposed SME liaison panel would impact thecredibility of the service.

The proposition of the SME liaison panel was positively received by all respondents. Itwas felt that having the value and credibility of trusted third parties would impactpositively on the credibility of the BBRS, would help the service to stay relevant, andwould help SMEs to have their voices heard.

Stakeholders felt it very important that the panel actas a genuine feedback mechanism. It was noted thatwhile some SME liaison panels they had encounteredhad added great value, others had not generated thechallenge needed to have a real impact

The make-up of the panel was seen to be very important to this end: members musthave genuine business experience, and access to research resources to make valuablerecommendations. It was recommended that the panel be built of businesspeople aswell as SME advocacy organisations, or those that have a role in both, to ensure abalanced view and avoid bias.

Data and insights to be published

We asked respondents what data and insights the BBRS should look to publish as partof its public interest remit to support policymaking.

Respondents felt this was an important remit for the BBRS in evidencing theorganisation’s transparency, and for helping to inform policymaking around SMEs.Some participants felt there was currently a lack of data around SMEs access tofunding, and so the BBRS’ insights were felt to be particularly valuable for effectivepolicymaking in this area going forward.

There were three key areas of interest to explore raised repeatedly:

• Findings at a regional level – exploring the trends and findings in how SMEperformance and disputes vary across the UK. This was seen to shine a light onvariations in access to finance around the country.

• Information at a sectoral level – similarly, trends in the sectors particularly affected bydisputes were seen as valuable to effective policymaking.

• Insights into the service itself – the volume and types of disputes most seen; thelenders typically involved; the types of ADR used in producing positive outcomes,examples of the banks interacting meaningfully, and the examples of where claimswere not successful and why.

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Effective methods and channels for promoting the BBRS around its launchA range of channels were recommended for reaching SMEs to promote the BBRSeffectively and ensure visibility of the service across any channel that an aggrieved SMEmight use to access information. The following physical and digital channels weremost frequently recommended by participants:

Physical channels:

• Word of mouth – stakeholders felt that the SME sector was particularly likely to shareexperiences and recommendations, and as such early successes for the BBRS wouldlikely be spread by word of mouth and drive take-up among businesses.

• The banks and the Financial Ombudsman Service – participants saw these as thenatural route to recommend the service, where their processes could not resolvedisputes.

• Recommendations from advisors – participants recommended promotingawareness and understanding of the service to legal and accounting advisors whoare in regular contact with SMEs and act as a source of trusted advice.

• High level political awareness – participants saw local governmental bodies as key tospreading the word to constituents, as they will often be the first port of call for localbusinesses in need. The support of these bodies would also be important forbuilding trust around the validity and effectiveness of the service, particularly for theBBRS as an independent organisation.

• Media engagement – a press conference and launch event were perceived to be animportant moment for launching the service and attracting media attention.

• Representative bodies & trade associations – specific bodies such as this will often bean early port of call for businesses and were seen as an important channel to haveawareness and to direct businesses on to. They also often run their own channels toreach members, such as ‘roadshows’, newsletters, webinars or podcasts, which offeran opportunity to reach potential customers. However, the limitations of thesebodies were repeatedly noted by stakeholders who did not represent them, as manySMEs are not members of associations.

• Targeted sector bodies – One recommendation was also made that the BBRS look toidentify sectors that are in dispute and target such sectors with their supportaccordingly.

Digital channels:

• Social media – during lockdown, stakeholders felt that SMEs had been more activeon social media, and particularly on LinkedIn, not only posting content, but using itas a forum for discussion and support.

• SEO – one stakeholder also raised the importance of strong SEO, to ensure theBBRS’ message appears for potential customers actively searching for help on theInternet.

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Content

The types of content viewed as particularly impactful to communicate to potentialcustomers were the following:

• Case studies – stakeholders felt that featuring the experience of individuals who hadused the service was paramount. It was recommended that case studies feature arange of customers and feel authentic: both those whose cases had achieved theoutcomes they desired, and those who did not.

• Videos – short, informative videos were mentioned as an effective way to quickly andclearly explain the service’s role to time-poor audiences.

• Clear messaging – participants felt that SMEs are particularly time pressured in thecurrent climate, and clear and simple messaging emphasising the BBRS’ role,success rates and that it is free of charge would be most effective.

Where relevant, we asked whether stakeholders would be willing to promote thelaunch of the BBRS to their members. All organisations that felt the service would berelevant to members offered their support in promoting the launch through theirchannels or by referring members to the service when the need might arise.

It was felt that the launch of the BBRS would be positively received by business owners,by small business organisations and advisors alike. However, it was noted by multiplerespondents that was important not only to create an impactful launch campaign butalso a sustained programme of awareness-building and education to drive usage ofthe new service in an effective and ongoing manner.

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If you have an unresolved complaint against one of the participating banks, you canregister your interest in the BBRS service here (https://thebbrs.org/register-your-interest/). Even if the case cannot enter the Live Pilot, it will be ready for early review byour team once we go live.

We also invite you to visit the ‘frequently asked questions’ on our website(https://thebbrs.org/faqs/). Here you will find information in response to some of themore regular enquiries we receive. To keep up with our other news, please visit thenews section of our website (https://thebbrs.org/news-updates/).

How to find out more

If you have any questions about our service, you can contact us via phone by calling 0345 646 8825.

Alternatively, you can email us at hello@thebbrs.org.

Contact Us

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